Hollis Bredeweg

Wednesday, February 8, 2012

Why do corporations make stupid decisions?

Amidst the ups and downs of the GOP primary process, a dominant news story this first week of February has been a really stupid corporate decision.

The Susan G. Komen Foundation for the Cure announced it would bar Planned Parenthood from receiving grants for breast cancer screening, and then reversed that decision amidst an amazing outburst of protest toward Komen and support for PP. The damage to Komen's reputation will likely be long-lasting.

There have been other recent, stupid moves:

Late last summer Netflix announced a new pricing policy that would have doubled the price of their service for us, and then created a new entity named Qwikster to handle DVD mail-based films. Netflix would continue as an on-line streaming movie service. The public outcry brought about the death of Qwikster before it was launched, and huge losses of subscribers (including me).

Wells Fargo was one of several banks that announced monthly debit card fees last summer. The fees never materialized, again because of tremendous negative reaction.

Analysis of these stories has focused on the power of social networks to bring about rapid change, and I can but concur. Frustrated consumers are no longer isolated, and can mount movements against corporate abuse. My question is this: Why do big, successful corporations make such stupid decisions in the first place?

I believe corporations do stupid things as a result of a version of "group think", first documented after the Bay of Pigs fiasco in the early 1960's. Group think was described as a process in which people in groups, boards, and the like withhold negative opinions they feel they alone harbor and instead try to be as positive as they can. Being the cynic and pessimist I am, I believe corporations create group think by placing a premium on compliance. People who raise questions and objections are not team players. Meanwhile, those who nod their heads most vigorously rise to the top, there to occupy positions beyond the level such uncritical thinkers deserve. Over time the entire organization becomes stupid.

A clue to this type of group think is found in the utter astonishment expressed by corporate leaders when one of their idiotic decisions is ridiculed. They had never considered the possibility of a negative reaction precisely because they weeded out of their midst any employees bright enough or brave enough to argue with them. Where are the court jesters when you need them? Unemployed. Probably blogging.